Five Questions About Bitcoin Mining If The Market Is Not In a Hurry to Grow

The cryptocurrency market is very unstable, but thanks to its strong fluctuations you can make good money.

Mining is the least sensitive to the market situation, as it generates income in bitcoins. Unlike extreme cases, when everything is very good or very bad, a market lull carries minimal risks, but at the same time does not allow you to multiply your capital. If the lull lingers, many users begin to question the mining service provider whether everything is really going as it should and whether something can be done about it.

Below are the 5 most frequently asked questions and our answers to them.

1. Why did I start earning less than before?

Support: There may be a number of reasons. First of all, the BTC mining difficulty has increased. This indicator changes every two weeks, the chart can be viewed here. Maintenance fee (MF) may also rise due to bitcoin depreciation, as it is pegged to the dollar.

2. Why did I start paying a larger MF?

Support: The BTC exchange rate has fallen and the maintenance fee (MF) in terms of USD has increased.

3. Why did I start receiving less BTC, even though the difficulty remained the same?

Support: Usually the reason is a decrease in the BTC exchange rate, if you have Autopay enabled, then the MF in USD is deducted from your daily income. When the BTC exchange rate decreases, you pay more, and your net income decreases.

4  Why did I start receiving less BTC, even though the exchange rate increased?

Support: As the exchange rate increases, the mining difficulty often increases, since new miners are connected. You can view the difficulty statistics at the link.

5. What is the conversion rate for MF payments?

Support: The conversion is performed at the average exchange rate (we use the average rate from the main exchanges) on the transaction day.

Daily mining rewards are never the same. 

Mining income is directly proportional to the mining power of the equipment and inversely proportional to the difficulty. It is calculated using the following formula:

N = (t×R×H) / (D×2³²) × BTC rate, where

N - income in USD

BTC rate - BTC/USD rate

t - mining period in seconds (e.g., a day = 86400 s)

R - reward per block in BTC (6.25)

H - hashrate (H/s)

D - difficulty (T)

As you can see, even if you use the same equipment, there are several factors that make your income change on a daily basis.

Of course, the most important factor is the bitcoin exchange rate. When bitcoin is growing against the dollar, everyone is happy. However, don’t expect this to always be the case. When the exchange rate drops sharply, the miner's income in USD decreases proportionally. In critical cases, it may be lower than the daily maintenance fee. Then your miner will go into pause mode until you top up your account balance.

In addition to the currency factor, there is also the bitcoin network difficulty. The higher the difficulty, the more computing resources are required to mine the block. Therefore, as the difficulty increases, the income always decreases proportionally.

It is worth noting that the difficulty almost always increases with only minor rollbacks, because miners want to earn more and connect increasingly more equipment to mining. The only time the difficulty dropped significantly was in 2021, when mining was banned in China.

Halving occurs on the bitcoin network every four years, and mining revenues are halved as a result. This is a fairly rare event, but it should also be taken into account when investing for a significant period of time.

In addition to the revenue side of Bitcoin mining, the expenditure side is very important. The main mining costs are related to the electricity payment. If electricity becomes more expensive, mining profits fall. We can’t count on electricity becoming cheaper in the future.

The MF payment is made in dollars, but when Autopay is enabled, it is deducted from the daily mining reward. The payment is converted at a weighted average daily exchange rate based on data from the main exchanges.

Thus, when buying a cloud mining contract, you need to understand that to maintain the same level of profitability, all other things being equal, the bitcoin exchange rate needs to constantly increase or its network difficulty - to decrease. Even if the exchange rate simply returns to previous levels, the income is likely to grow smaller, since the difficulty has probably increased since.

The bitcoin network difficulty can be tracked on various resources, e.g., here.

As a provider of cloud mining services, the data center minimizes its own costs and user expenses in the most careful way, therefore, even in the most difficult situations, it retains the potential for a multiple increase in the profitability of its strategic investors - retail cloud mining customers who are in this for the long run.